dawood family takaful limited - no. f. 22(40)/2016 -legis ...islamabad, wednesday, may 31, 2017 part...

ISLAMABAD, WEDNESDAY, MAY 31, 2017

PART I

Acts, Ordinances, President’s Orders and Regulations

NATIONAL ASSEMBLY SECRETARIAT

Islamabad, the 30th May, 2017

No. F. 22(40)/2016-Legis.—The following Act of Majlis-e-Shoora (Parliament) received the assent of the President on the 30th May, 2017 is hereby

published for general information:—

ACT NO. XIX OF 2017

AN

ACT

to reform and re-enact the law relating to companies and for matters

connected therewith

WHEREAS it is expedient to reform company law with the objective of

facilitating corporatization and promoting development of corporate sector,

encouraging use of technology and electronic means in conduct of business and

regulation thereof, regulating corporate entities for protecting interests of

shareholders, creditors, other stakeholders and general public, inculcating principles

of good governance and safeguarding minority interests in corporate entities and

providing an alternate mechanism for expeditious resolution of corporate disputes

and matters arising out of or connected therewith;

It is hereby enacted as follows:—

(181)

Price: Rs. 272.50

[741(2017)/Ex. Gaz.]

182 THE GAZETTE OF PAKISTAN, EXTRA., MAY 31, 2017 [PART I

PART I

PRELIMINARY

1. Short title, extent and commencement.—(1) This Act may be

called the Companies Act, 2017.

(2) It extends to the whole of Pakistan.

(3) This Act shall come into force at once, except section 456 which

shall come into force on such date as the Federal Government or an authority or

person authorized by it may, by notification in the official Gazette, appoint.

2. Definitions.—(1) In this Act, unless there is anything repugnant in

the subject or context,—

(1) ―advocate‖ shall have the same meaning as assigned to it in section 2 of

the Legal Practitioners and Bar Councils Act, 1973 (XXXV of 1973);

(2) ―alter‖ or ―alteration‖ includes making of additions or omissions without substituting or destroying main scheme of the document;

(3) ―articles‖ mean the articles of association of a company framed in accordance with the company law or this Act;

(4) ―associated companies‖ and ―associated undertakings‖ mean any two or more companies or undertakings, or a company and an

undertaking, interconnected with each other in the following

manner, namely:—

(a) if a person who is owner or a partner or director of a company or undertaking, or who, directly or indirectly, holds or

controls shares carrying not less than twenty percent of the

voting power in such company or undertaking, is also the

owner or partner or director of another company or

undertaking, or directly or indirectly, holds or controls shares

carrying not less than twenty percent of the voting power in

that company or undertaking; or

(b) if the companies or undertakings are under common management or control or one is the subsidiary of another; or

(c) if the undertaking is a modaraba managed by the company;

and a person who is the owner of or a partner or director in a

company or undertaking or, who so holds or controls shares

PART I] THE GAZETTE OF PAKISTAN, EXTRA., MAY 31, 2017 183

carrying not less than ten percent of the voting power in a company

or undertaking, shall be deemed to be an ―associated person‖ of

every such other person and of the person who is the owner of or a

partner or director in such other company or undertaking, or who so

holds or controls such shares in such company or undertaking:

Provided that—

(i) shares shall be deemed to be owned, held or controlled by a person if they are owned, held or controlled by that person or

by the spouse or minor children of the person;

(ii) directorship of a person or persons by virtue of nomination by concerned Minister-in-Charge of the Federal Government or

as the case may be, a Provincial Government or a financial

institution directly or indirectly owned or controlled by such

Government or National Investment Trust; or

(iii) directorship of a person appointed as an ―independent director‖; or

(iv) shares owned by the National Investment Trust or a financial institution directly or indirectly owned or controlled by the

Federal Government or a Provincial Government; or shares

registered in the name of a central depository, where such

shares are not beneficially owned by the central depository;

shall not be taken into account for determining the status of a

company, undertaking or person as an associated company,

associated undertaking or associated person;

(5) ―authorised capital‖ or ―nominal capital‖ means such capital as is authorised by the memorandum of a company to be the maximum

amount of share capital of the company;

(6) ―banking company‖ means a banking company as defined in clause (c) of section 5 of the Banking Companies Ordinance, 1962

(LVII of 1962);

(7) “beneficial ownership of shareholders or officer of a company” means ownership of securities beneficially owned, held or

controlled by any officer or substantial shareholder directly or

indirectly, either by—

(a) him or her;


(b) the wife or husband of an officer of a company, not being herself or himself an officer of the company;

(c) the minor son or daughter of an officer where ―son‖ includes step-son and ―daughter‖ includes step-daughter; and ―minor‖

means a person under the age of eighteen years;

(d) in case of a company, where such officer or substantial shareholder is a shareholder, but to the extent of his

proportionate shareholding in the company:

Provided that ―control‖ in relation to securities means

the power to exercise a controlling influence over the voting

power attached thereto:

Provided further that in case the substantial shareholder

is a non-natural person, only those securities will be treated

beneficially owned by it, which are held in its name.

Explanation.—For the purpose of this Act “substantial

shareholder”, in relation to a company, means a person who

has an interest in shares of a company-

(a) the nominal value of which is equal to or more than ten per cent of the issued share capital of the company; or

(b) which enables the person to exercise or control the exercise of ten per cent or more of the voting power at a

general meeting of the company;

(8) ―board‖, in relation to a company, means board of directors of the company;

(9) ―body corporate‖ or ―corporation‖ includes—

(a) a company incorporated under this Act or company law; or

(b) a company incorporated outside Pakistan, or

(c) a statutory body declared as body corporate in the relevant statute, but does not include—

(i) a co-operative society registered under any law relating to cooperative societies; or

(ii) any other entity, not being a company as defined in this Act or any other law for the time being which the

concerned Minister-in-Charge of the Federal

Government may, by notification, specify in this behalf;


(10) ―book and paper” and “book or paper‖ includes books of account, cost accounting records, deeds, vouchers, writings,

documents, minutes and registers maintained on paper or in

electronic form;

(11) ―books of account‖ include records maintained in respect of—

(a) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take

place;

(b) all sales and purchases of goods and services by the company;

(c) all assets and liabilities of the company; and

(d) items of cost in respect of production, processing, manufacturing or mining activities;

(12) ―central depository‖ shall have the same meaning as assigned to it under the Securities Act, 2015 (III of 2015);

(13) ―chartered accountant‖ shall have the same meaning as assigned to it under the Chartered Accountants Ordinance, 1961 (X of 1961);

(14) ―chief executive‖, in relation to a company means an individual who, subject to control and directions of the board, is entrusted with

whole, or substantially whole, of the powers of management of

affairs of the company and includes a director or any other person

occupying the position of a chief executive, by whatever name

called, and whether under a contract of service or otherwise;

(15) ―chief financial officer‖ means an individual appointed to perform such functions and duties as are customarily performed by a chief

financial officer;

(16) ―Commission‖ shall have the same meaning as assigned to it under the Securities and Exchange Commission of Pakistan Act, 1997

(XLII of 1997);

(17) ―company‖ means a company formed and registered under this Act or the company law;

(18) ―company law‖ means the repealed Companies Act, 1913 (VII of 1913), Companies Ordinance, 1984(XLVII of 1984), Companies

Ordinance, 2016 (VI of 2016) and also includes this Act unless

the context provides otherwise;

(19) ―company limited by guarantee‖ means a company having the liability of its members limited by the memorandum to such


amount as the members may respectively thereby undertake to

contribute to the assets of the company in the event of its being

wound up;

(20) ―company limited by shares‖ means a company; having the liability of its members limited by the memorandum to the extent of

amount, if any, remaining unpaid on the shares respectively held by

them;

(21) ―company secretary‖ means any individual appointed to perform secretarial and other duties customarily performed by a company

secretary and declared as such, having such qualifications and

experience, as may be specified;

(22) ―cost and management accountant‖ shall have the same meaning as assigned to it under the Cost and Management Accountants Act,

1966 (XIV of 1966);

(23) ―Court‖ means a Company Bench of a High Court having jurisdiction under this Act;

(24) ―debenture‖ includes debenture stock, bonds, term finance certificate or any other instrument of a company evidencing a debt,

whether constituting a mortgage or charge on the assets of the

company or not;

(25) “director‖ includes any person occupying the position of a director, by whatever name called;

(26) ―document‖ includes any information or data recorded in any legible form or through use of modern electronic devices or

techniques whatsoever, including books and papers, returns,

requisitions, notices, certificates, deeds, forms, registers,

prospectus, communications, financial statements or statement of

accounts or records maintained by financial institutions in respect

of its customers;

(27) ―e-service‖ means any service or means provided by the Commission for the lodging or filing of electronic documents;

(28) ―electronic document‖ includes documents in any electronic form and scanned images of physical documents;

(29) ―employees’ stock option‖ means the option given to the directors, officers or employees of a company or of its holding company or

subsidiary company or companies, if any, which gives such

directors, officers or employees, the right to purchase or to


subscribe for shares of the company at a price to be determined in

the manner as may be specified;

(30) ―expert‖ includes an engineer, a valuer, an actuary, a chartered accountant or a cost and management accountant and any other

person who has the power or authority to issue a certificate in

pursuance of any law for the time being in force or any other person

notified as such by the Commission;

(31) “financial institution‖ includes—

(a) any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or

ancillary business in Pakistan through its branches within or

outside Pakistan and includes a government savings bank, but

excludes the State Bank of Pakistan;

(b) a modaraba or modaraba management company, leasing company, investment bank, venture capital company,

financing company, asset management company and credit or

investment institution, corporation or company; and

(c) any company authorised by law to carry on any similar business, as the concerned Minister-in-Charge of the Federal

Government may by notification in the official Gazette,

specify;

(32) ―financial period‖ in relation to a company or any other body corporate, means the period (other than financial year) in respect of

which any financial statements thereof are required to be made

pursuant to this Act;

(33) ―financial statements‖ in relation to a company, includes—

(a) a statement of financial position as at the end of the period;

(b) a statement of profit or loss and other comprehensive income or in the case of a company carrying on any activity not for

profit, an income and expenditure statement for the period;

(c) a statement of changes in equity for the period;

(d) a statement of cash flows for the period;

(e) notes, comprising a summary of significant accounting policies and other explanatory information;


(f) comparative information in respect of the preceding period; and

(g) any other statement as may be prescribed;

(34) ―financial year‖ in relation to a company or any other body corporate, means the period in respect of which any financial

statement of the company or the body corporate, as the case may

be, laid before it in general meeting, is made up, whether that

period is a year or not;

(35) ―foreign company‖ means any company or body corporate incorporated outside Pakistan, which—

(a) has a place of business or liaison office in Pakistan whether by itself or through an agent, physically or through electronic mode; or

(b) conducts any business activity in Pakistan in any other manner as may be specified;

(36) ―Government‖ includes Federal Government or, as the case may be, Provincial governments unless otherwise expressly provided in

this Act;

(37) ―holding company‖, means a company which is another company‘s holding company if, but only if, that other company is

its subsidiary;

(38) ―listed company‖ means a public company, body corporate or any other entity whose securities are listed on securities exchange;

(39) ―listed securities‖ means securities listed on the securities exchange;

(40) ―memorandum‖ means the memorandum of association of a company as originally framed or as altered from time to time in

pursuance of company law or of this Act;

(41) ―modaraba” and “modaraba company‖ shall have the same meaning as assigned to it in the Modaraba Companies and

Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of

1980);


(42) ―mortgage or charge‖ means an interest or lien created on the property or assets of a company or any of its undertakings or both

as security;

(43) ―net worth‖ means the amount by which total assets exceed total liabilities;

(44) ―notification‖ means a notification published in the official Gazette and the expression ―notify‖ shall be construed accordingly;

(45) ―officer‖ includes any director, chief executive, chief financial officer, company secretary or other authorised officer of a

company;

(46) ―ordinary resolution‖ means a resolution passed by a simple majority of such members of the company entitled to vote as are

present in person or by proxy or exercise the option to vote through

postal ballot, as provided in the articles or as may be specified, at a

general meeting;

(47) ―postal ballot” means voting by post or through any electronic mode:

Provided that voting through postal ballot shall be subject to

the provision in the articles of association of a company, save as

otherwise provided in this Act;

(48) ―prescribed‖ means prescribed by rules made by the Federal Government under this Act;

(49) ―private company‖ means a company which, by its articles-

(a) restricts the right to transfer its shares;

(b) limits the number of its members to fifty not including persons who are in the employment of the company; and

(c) prohibits any invitation to the public to subscribe for the shares, if any, or debentures or redeemable capital of the

company:

Provided that, where two or more persons hold one or

more shares in a company jointly, they shall, for the purposes

of this definition, be treated as a single member;


(50) ―promoter‖ means a person—

(a) who is named as a subscriber to the memorandum of association of a company; or

(b) who has been named as such in a prospectus; or

(c) who has control over affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

(d) in accordance with whose advice, directions or instructions the board of the company is accustomed to act:

Provided that—

(i) nothing in sub-clause (d) shall apply to a person who is

acting merely in a professional capacity; and

(ii) nothing contained in sub-clause (d) shall apply to the

Commission, registrar or any authorised officer by virtue

of enforcement or regulation of the provisions of this

Act or any rules, regulations, instructions, directions,

orders thereof;

(51) ―prospectus‖ shall have the same meaning as assigned to it under the Securities Act, 2015 (III of 2015);

(52) ―public company‖ means a company which is not a private company;

(53) “public interest company‖ means a company which falls under the criteria as laid down in the Third Schedule to this Act or

deemed to be such company under section 216;

(54) ―public sector company‖ means a company, whether public or private, which is directly or indirectly controlled, beneficially

owned or not less than fifty-one percent of the voting securities or

voting power of which are held by the Government or any agency

of the Government or a statutory body, or in respect of which the

Government or any agency of the Government or a statutory body,

has otherwise power to elect, nominate or appoint majority of its

directors and includes a public sector association not for profit,

licenced under section 42:

Provided that nomination of directors by the Commission on

the board of the securities exchange or any other entity or operation

of any other law shall not make it a public sector company;


(55) ―redeemable capital‖ includes sukuk and other forms of finances obtained on the basis of participation term certificate (PTC),

musharika certificate, term finance certificate (TFC) or any other

security or obligation not based on interest, representing an

instrument or a certificate of specified denomination, called the face

value or nominal value, evidencing investment of the holder in the

capital of the company other than share capital, on terms and

conditions of the agreement for the issue of such instrument or

certificate or such other certificate or instrument as the concerned

Minister-in-Charge of the Federal Government may, by notification

in the official Gazette, specify for the purpose;

Explanation. ―sukuk‖ represents redeemable investment in

certificates of equal nominal value representing undivided shares in

ownership of tangible assets of a particular project or specific

investment activity, usufruct and services;

(56) ―register of companies‖ means the register of companies maintained by the registrar on paper or in any electronic form under

this Act;

(57) ―registrar‖ means registrar, an additional registrar, an additional joint registrar, a joint registrar, a deputy registrar, an assistant

registrar or such other officer as may be designated by the

Commission, performing duties and functions under this Act;

(58) ―regulations‖ means the regulations made by the Commission under this Act;

(59) ―rules‖ means rules made by the Federal Government under this Act;

(60) ―scheduled bank‖ shall have the same meaning as assigned to it under the State Bank of Pakistan Act, 1956 (XXXIII of 1956);

(61) ―securities‖ include the securities as provided in sub-clauses (a) to (i) of clause (lii) of section 2 of the Securities Act, 2015 (III of 2015)

whether listed or not;

(62) ―securities exchange‖ means a public company licenced by the Commission as a securities exchange under the Securities Act, 2015

(III of 2015);

(63) ―share‖ means a share in the share capital of a company;


(64) ―Shariah compliant company” means a company which is conducting its business according to the principles of Shariah;

(65) ―single member company‖ means a company which has only one member;

(66) ―special resolution‖ means a resolution which has been passed by a majority of not less than three-fourths of such members of the

company entitled to vote as are present in person or by proxy or

vote through postal ballot at a general meeting of which not less

than twenty-one days‘ notice specifying the intention to propose the

resolution as a special resolution has been duly given:

Provided that if all the members entitled to attend and vote at

any such meeting so agree, a resolution may be proposed and

passed as a special resolution at a meeting of which less than

twenty-one days notice has been given;

(67) ―specified‖ means specified through regulations made under this Act;

(68) ―subsidiary company‖ or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in

which the holding company

(a) controls the composition of the board; or

(b) exercises or controls more than one-half of its voting securities either by itself or together with one or more of its subsidiary

companies:

Provided that such class or classes of holding companies shall

not have layers of subsidiaries beyond such numbers, as may be

notified,

Explanation.For the purposes of this clause

(i) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause

(a) or sub-clause (b) is of another subsidiary company of the

holding company;

(ii) the composition of a company‘s board shall be deemed to be controlled by another company if that other company by


exercise of power exercisable by it at its discretion can

appoint or remove all or a majority of the directors;

(iii) the expression ―company‖ includes any body corporate;

(iv) ―layer‖ in relation to a holding company means its subsidiary or subsidiaries;

(69) ―Table‖ means Table in a Schedule to this Act;

(70) ―turnover‖ means the aggregate value of sale, supply or distribution of goods or on account of services rendered, or both,

net of discounts, if any, held by the company during a financial

year;

(71) ―unlimited company‖ means a company not having any limit on the liability of its members;

(72) ―valuer‖ means a valuer registered with the Commission;

(73) ―voting right‖ means the right of a member of a company to vote on any matter in a meeting of the company either present in person

or through video-link or by proxy or by means of postal ballot:

Provided that attending of meeting through video-link shall be

subject to such facility arranged by the company and in the manner

as may be specified, save as otherwise provided in this Act; and

(74) ―wholly owned subsidiary‖ a company shall be deemed to be a wholly owned subsidiary of another company or the statutory body

if all its shares are owned by that other company or the statutory

body.

(2) The words and expressions used and not defined in this Act but

defined in the Securities Act, 2015 (III of 2015) or the Securities and Exchange

Commission of Pakistan Act, 1997(XLII of 1997) or the Central Depositories

Act, 1997 (XIX of 1997) shall have the meanings respectively assigned to them

in those Acts.

3. Application of Act to non-trading companies with purely

provincial objects.—(1) The powers conferred by this Act on the concerned

Minister-in-Charge of the Federal Government or the Commission, in relation to

companies which are not trading corporations and the objects of which are

confined to a single Province, may be exercised by the Minister-in-Charge of the

Provincial Government:


Provided that where the licence is issued by the Provincial Government

or, as the case may be, its concerned Minister-in-Charge, in exercise of the

powers conferred by this section, the company shall mention this fact in all its

documents.

(2) A non-trading corporation formed under sub-section (1) extending

its operational activities beyond the territorial limits of its respective province

shall be liable to a penalty of level 3 on the standard scale and be wound up on

the application by the Commission.

4. Act to override.—Save as otherwise expressly provided herein—

(a) the provisions of this Act shall have effect notwithstanding anything contained in any other law or the memorandum or articles

of a company or in any contract or agreement executed by it or in

any resolution passed by the company in general meeting or by its

directors, whether the same be registered, executed or passed, as the

case may be, before or after the coming into force of the said

provisions; and

(b) any provision contained in the memorandum, articles, contract, agreement, arrangement or resolution aforesaid shall, to the extent

to which it is repugnant to the aforesaid provisions of this Act,

become, or be, void, as the case may be.

PART II

JURISDICTION OF COURT

5. Jurisdiction of the Court and creation of Benches.—(1) The

Court having jurisdiction under this Act shall be the High Court having

jurisdiction in the place at which the registered office of the company is situate.

(2) Notwithstanding anything contained in any other law no civil court

as provided in the Code of Civil Procedure, 1908 (Act V of 1908) or any other

court shall have jurisdiction to entertain any suit or proceeding in respect of any

matter which the Court is empowered to determine by or under this Act.

(3) For the purposes of jurisdiction to wind up companies, the

expression ―registered office‖ means the place which has longest been the

registered office of the company during the one hundred and eighty days

immediately preceding the presentation of the petition for winding up.

(4) There shall be, in each High Court, one or more benches on

permanent basis, each to be known as the Company Bench, to be constituted by


the Chief Justice of the High Court to exercise the jurisdiction vested in the High

Court under this Act:

Provided that Benches constituted under the Companies Ordinance, 1984

(XLVII of 1984), shall continue to function accordingly unless otherwise notified

by the respective Chief Justice of the High Court:

Provided further that provisions of section 6 shall be effective from the

date of notification by the Chief Justice of the respective High Court within one

hundred and eighty days from the date of the commencement of this Act.

(5) There shall be a Registrar to be known as ―Registrar of the

Company Bench‖ duly notified by the Chief Justice of the respective High Court

who shall be assisted by such other officers as may be assigned by the Chief

Justice of the respective High Court.

(6) The Registrar of the Company Bench shall perform all the functions

assigned to it under this Act including all ministerial and administrative business

of the Company Bench such as the receipt of petitions, applications, written

replies, issuance of notices, service of summons and such other functions or

duties as may be prescribed under section 423.

(7) The Chief Justice of the respective High Court, if deemed

appropriate, may also establish a secretariat in each Company Bench of the

respective High Court in such form and manner to provide secretarial support and

to perform such functions as may be prescribed under section 423.

6. Procedure of the Court and appeal.—(1) Notwithstanding

anything contained in any other law for the time being in force all written

submissions to the Court under this Act shall be filed with the Registrar of the

Company Bench.

(2) For the purposes of this Act, written submissions shall, inter alia,

include-

(a) a petition or application setting out a concise statement of facts, grounds and the relief claimed;

(b) a written reply with particulars of set off, if any;

(c) an affidavit of facts by the petitioner or applicant, or respondent, as the case may be, including affidavits, if required, of other persons

in support of the case, duly attested by the oath commissioner, or as

may be provided under the rules;


(d) any other relevant documents in possession of the petitioner or applicant or respondent, as the case may be;

(e) any application for discovery of documents or interim injunction, if required;

(f) a list of any case law along with a summary of the same on which the petitioner or applicant is placing reliance;

(g) address for effecting service, mobile number, email and fax or any other mode notified by the Court; and

(h) any other document as may be required by the Registrar of the Company Bench.

(3) Where any petition or application is filed under any provision of

this Act, summons may be issued by the Registrar of the Company Bench along

with a copy of the petition or application and the documents annexed therewith

and the same shall be served on the respondent through the bailiff or process-

server of the Court, through registered post, acknowledgement due, by courier

and by publication in one English language and one Urdu language daily

newspaper and, in addition, if so directed by the Court through electronic modes,

and the service duly effected through any one of the modes mentioned under this

sub-section shall be deemed to be valid service.

Explanation.―electronic modes‖ means service of summons on a party or other person by electronic transmission through devices such as, facsimile,

email, or in such other form or mode as may be notified by the Court.

(4) The respondent shall file a written reply and particulars of set-off, if

any, as set out in sub-section (2) of this section with the concerned Registrar of

the Company Bench within thirty days from the date of first service through any

of the modes as laid down in sub-section (3).

(5) Where the respondent fails to file the written reply within the time

prescribed in sub-section (4), a report shall be submitted by the Registrar of the

Company Bench before the Court and the Court may pass necessary orders to

proceed exparte and announce the final order on the basis of the documents

available on record.

(6) The Registrar of the Company Bench, on completion of receipt of

all written submissions and after ensuring that all copies of such written

submissions are duly supplied to the parties as per procedure laid down by the

Court, shall present the case file to the Court on a day fixed under notice to the


parties, within forty-five days of the first service of notices or such extended time

as may be granted by the Court.

(7) The Court after consulting the counsel of the parties shall fix a date

and allocate time for hearing of the case.

(8) No adjournment shall be granted once the Court has fixed a date of

hearing under sub-section (7) and it will be duty of the parties to ensure the

presence of their respective counsel or in absence of the counsel make alternate

arrangements:

Provided that only in exceptional circumstances beyond control of a

party, the Court may grant another opportunity of hearing subject to the payment

of an amount of rupees ten thousand or such higher amount as may be

determined by the Court as costs to be paid to the Court.

(9) The Court shall treat affidavits, counter affidavits and other

documents filed by the parties to the proceedings as evidence and decide

the matter on the basis of the documents and affidavits placed before the Court,

in a summary manner and pass final orders within the time stipulated in

sub-section (11).

(10) In exceptional circumstances where the Court is of the view that

any issue of facts requires cross examination, the Court may order attendance of

the relevant deponent or deponents for the purposes of cross examination by such

opposing party or parties as the Court deems fit and for the purposes of this

section the affidavit filed by such deponent shall be considered as his

examination-in-chief:

Provided that—

(i) the Court may refer the matter to the Registrar of the Company Bench or any other person for recording of cross examination of the

deponent who shall complete recording of cross examination within

thirty days from the date of the order of the Court, or such extended

time as may be allowed by the Court which shall not be more than

fifteen days on payment of rupees ten thousand or such higher

amount as may be determined by the Court as costs payable to the

Court and to submit a report accordingly;

(ii) all questions and answers along with any objections raised by any

party shall be duly recorded in writing; and

(iii) the Registrar of the Company Bench shall have all the powers of the Civil Court under the Code of Civil Procedure, 1908 (V of 1908)


for the purposes of execution of service and summoning of

deponents and conducting cross examination in accordance with the

directions of the Court.

(11) The petition presented before the Court shall be decided within a

period of one hundred and twenty days from the date of presentation of the

case and for this purpose the Court may, if it is in the interest of justice, conduct

the proceedings on a day to day basis and if the Court deems fit it may impose

costs which may extend to one hundred thousand rupees per day or such higher

amount as the Court may determine against any party to the proceeding causing

the delay.

(12) The Court may, at any time, take notice of serious misstatements

and material non-disclosure of facts by any party to the proceedings and dismiss

the petition or application or close the right of defence of the respondent with

costs of the proceedings and impose a fine which may extend to one hundred

thousand rupees whichever is higher and pass a final order.

(13) Notwithstanding anything contained in this section, the Registrar of

the Company Bench shall place any application for interim relief including any

interlocutory order before the Court for adjudication immediately upon its filing.

(14) Any person aggrieved by any judgment or final order of the Court

passed in its original jurisdiction under this Act may, within sixty days, file a

petition for leave to appeal in the Supreme Court of Pakistan:

Provided that no appeal or petition shall lie against any interlocutory

order of the Court.

(15) Save as otherwise expressly provided under this Act, the provisions

of the Qanun-e-Shahadat (Order)1984 (P.O. No. X of 1984) and the Code of

Civil Procedure, 1908 (Act V of 1908) shall not apply to the proceedings under

this section except to such extent as the Court may determine in its discretion.

PART III

POWERS AND FUNCTIONS OF THE SECURITIES AND EXCHANGE

COMMISSION OF PAKISTAN

7. Powers and functions of the Commission.—(1) The Commission

shall exercise such powers and perform such functions as are conferred on it by

or under this Act.

(2) The powers and functions of the Commission under this Act shall

be in addition to and not in derogation to the powers and functions of the


Commission under the Securities and Exchange Commission of Pakistan Act,

1997 (XLII of 1997).

8. Reference by the Federal Government or Commission to the

Court.—(1) Without prejudice to the powers, jurisdiction and authority

exercisable by the concerned Minister-in-Charge of the Federal Government or

any functionary thereof or the Commission under this Act, the concerned

Minister-in-Charge of the Federal Government or the Commission, as the case

may be, may make a reference to the Court, on any question or matter which is

considered to be of special significance requiring orders, determination or action

concerning affairs of a company or class of companies or any action of any

officer thereof.

Explanation.—In this sub-section ―officer‖ includes an auditor,

liquidator or agent of the company.

(2) Where a reference is made to the Court under sub-section (1), the

Court may make such order as it may deem just and equitable under the

circumstances.

PART IV

INCORPORATION OF COMPANIES AND MATTERS INCIDENTAL

THERETO

9. Obligation to register certain associations, partnerships as

companies.—(1) No association, partnership or entity consisting of more than

twenty persons shall be formed for the purpose of carrying on any business that

has for its object the acquisition of gain by the association, partnership or entity,

or by the individual members thereof, unless it is registered as a company under

this Act and any violation of this section shall be an offence punishable under

this section.

(2) A person guilty of an offence under this section shall be liable to a

penalty not exceeding of level 1 on the standard scale and also be personally

liable for all the liabilities incurred in such business.

(3) Nothing in this section shall apply to—

(a) any society, body or association, other than a partnership, formed or incorporated under any law for the time being in force in Pakistan;

or

(b) a joint family carrying on joint family business; or


(c) a partnership of two or more joint families where the total number of members of such families, excluding the minor members, does

not exceed twenty; or

(d) a partnership formed to carry on practice as lawyers, accountants or any other profession where practice as a limited liability company

is not permitted under the relevant laws or regulations for such

practice.

PROVISIONS WITH RESPECT TO NAMES OF COMPANIES

10. Prohibition of certain names.—(1) No company shall be

registered by a name which contains such word or expression, as may be notified

by the Commission or in the opinion of the registrar is—

(a) identical with or resemble or similar to the name of a company; or

(b) inappropriate; or

(c) undesirable; or

(d) deceptive; or

(e) designed to exploit or offend religious susceptibilities of the people; or

(f) any other ground as may be specified.

(2) Except with prior approval in writing of the Commission, no

company shall be registered by a name which contains any word suggesting or

calculated to suggest—

(a) the patronage of any past or present Pakistani or foreign head of state;

(b) any connection with the Federal Government or a Provincial Government or any department or authority or statutory body of

any such Government;

(c) any connection with any corporation set up by or under any Federal or Provincial law;

(d) the patronage of, or any connection with, any foreign Government or any international organisation;


(e) establishing a modaraba management company or to float a modaraba; or

(f) any other business requiring licence from the Commission.

(3) Whenever a question arises as to whether or not the name of a

company is in violation of the foregoing provisions of this section, decision of

the Commission shall be final.

(4) A person may make an application, in such form and manner and

accompanied by such fee as may be specified, to the registrar for reservation of a

name set out in the application for a period not exceeding sixty days.

(5) Where it is found that a name was reserved under sub-section (4),

by furnishing false or incorrect information, such reservation shall be cancelled

and in case the company has been incorporated, it shall be directed to change its

name. The person making application under sub-section (4) shall be liable to a

penalty not exceeding level 1 on the standard scale.

(6) If the name applied for under sub-section (4) is refused by the

registrar, the aggrieved person may within thirty days of the order of refusal

prefer an appeal to the Commission.

(7) An order of the Commission under sub-section (6) shall be final

and shall not be called in question before any court or other authority.

11. Rectification of name of a company.—(1) A company which,

through inadvertence or otherwise, is registered by a name in contravention of

the provisions of section 10 or the name was obtained by furnishing false or

incorrect information—

(a) may, with approval of the registrar, change its name; and

(b) shall, if the registrar so directs, within thirty days of receipt of such direction, change its name with approval of the registrar:

Provided that the registrar shall, before issuing a direction for

change of the name, afford the company an opportunity to make

representation against the proposed direction.

(2) If the company fails to report compliance with the direction issued

under sub-section (1) within the specified period, the registrar may enter on the

register a new name for the company selected by him, being a name under which

the company may be registered under this Act and issue a certificate of

incorporation on change of name for the purpose of section 13.


(3) If a company makes default in complying with the direction issued

by the registrar under sub-section (1) or continue using previous name after the

name has been changed by the registrar under sub-section (2), shall be liable to a

penalty of level 1 on the standard scale.

12. Change of name by a company.—A company may, by special

resolution and with approval of the registrar signified in writing, change its

name:

Provided that no approval under this section shall be required where the

change in the name of a company is only the addition thereto, or the omission

therefrom, of the expression ―(Private)‖ or ―(SMC-Private)‖ or ―(Guarantee)

Limited‖ or ―Limited‖ or ―Unlimited‖, as the case may be, consequent upon the

conversion of the status of a company in accordance with the provisions of

sections 46 to 49.

13. Registration of change of name and effect thereof.—(1) Where a

company changes its name the registrar shall enter the new name on the register

in place of the former name, and shall issue a certificate of incorporation altered

to meet the circumstances of the case and, on the issue of such a certificate, the

change of name shall be complete.

(2) Where a company changes its name it shall, for a period of ninety

days from the date of issue of a certificate by the registrar under sub-section (1),

continue to mention its former name along with its new name on the outside of

every office or place in which its business is carried on and in every document or

notice referred to in section 22.

(3) The change of name shall not affect any rights or obligations of the

company, or render defective any legal proceedings by or against the company

and any legal proceedings that might have been continued or commenced against

the company by its former name may be continued by or commenced against the

company by its new name.

14. Mode of forming a company.—(1) Any—

(a) three or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and

complying with the requirements of this Act in respect of

registration, form a public company; or

(b) two or more persons so associated may in the like manner form a

private company; or


(c) one person may form a single member company by complying with

the requirements in respect of registration of a private company and

such other requirement as may be specified. The subscriber to the

memorandum shall nominate a person who in the event of death of

the sole member shall be responsible to—

(i) transfer the shares to the legal heirs of the deceased subject to succession to be determined under the Islamic law of

inheritance and in case of a non-Muslim members, as per their

respective law; and

(ii) manage the affairs of the company as a trustee, till such time the title of shares are transferred:

Provided that where transfer by virtue of this sub-section

is made to more than one legal heir, the company shall cease

to be a single member company and comply with the

provisions of section 47.

(2) A company formed under this section may be a company with or

without limited liability, that is to say—

(a) a company limited by shares; or

(b) a company limited by guarantee; or

(c) an unlimited company.

15. Liability for carrying on business with less than three or, in the

case of a private company, two members.—If at any time the number of

members of a company is reduced, in the case of a private company other than a

single member company, below two or in the case of any other company, below

three and the company carries on business for more than one hundred and

eighty days while the number is so reduced, every person who is a member of

the company during the time that it so carries on business after those one

hundred and eighty days and is cognizant of the fact that it is carrying on

business with fewer than two members or three members, as the case may be,

shall be severally liable for payment of whole debts of the company contracted

during that time and may be sued therefor without joinder in the suit of any other

member.


GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF

MEMORANDUM AND ARTICLES

16. Registration of memorandum and articles.—(1) There shall be

filed with the registrar an application on the specified form containing the

following information and documents for incorporation of a company, namely:—

(a) a declaration on the specified form, by an authorized intermediary or by a person named in the articles as a director, of compliance

with all or any of the requirements of this Act and the rules and

regulations made thereunder in respect of registration and matters

precedent or incidental thereto;

(b) memorandum of association of the proposed company signed by all subscribers, duly witnessed and dated;

(c) there may, in the case of a company limited by shares and there shall, in the case of a company limited by guarantee or an unlimited

company, be the articles of association signed by the subscribers

duly witnessed and dated; and

(d) an address for correspondence till its registered office is established and notified.

(2) Where the registrar is of the opinion that any document or

information filed with him in connection with the incorporation of the company

contains any matter contrary to law or does not otherwise comply with the

requirements of law or is not complete owing to any defect, error or omission or

is not properly authenticated, the registrar may either require the company to file

a revised document or remove the defects or deficiencies within the specified

period.

(3) Where the applicant fails under sub-section (2) to remove the

deficiencies conveyed within the specified period, the registrar may refuse

registration of the company.

(4) If the registrar is satisfied that all the requirements of this Act and

the rules or regulations made thereunder have been complied with, he shall

register the memorandum and other documents delivered to him.

(5) On registration of the memorandum of a company, the registrar

shall issue a certificate that the company is incorporated.

(6) The certificate of incorporation shall state—

(a) the name and registration number of the company;


(b) the date of its incorporation;

(c) whether it is a private or a public company;

(d) whether it is a limited or unlimited company; and

(e) if it is limited, whether it is limited by shares or limited by guarantee.

(7) The certificate under sub-section (5) shall be signed by the registrar

or authenticated by the registrar‘s official seal.

(8) The certificate under sub-section (5) shall be conclusive evidence

that the requirements of this Act as to registration have been complied with and

that the company is duly registered under this Act.

(9) If registration of the memorandum is refused, the subscribers of the

memorandum or any one of them authorised by them in writing may, within

thirty days of the order of refusal, prefer an appeal to the Commission.

(10) An order of the Commission under sub-section (9) shall be final

and shall not be called in question before any court or other authority.

17. Effect of memorandum and articles.—(1) The memorandum and

articles shall, when registered, bind the company and the members thereof to the

same extent as if they respectively had been signed by each member and

contained a covenant on the part of each member, his heirs and legal

representatives, to observe and be bound by all the provisions of the

memorandum and of the articles, subject to the provisions of this Act.

(2) All moneys payable by a subscriber in pursuance of his undertaking

in the memorandum of association against the shares subscribed shall be a debt

due from him and be payable in cash within thirty days from the date of

incorporation of the company:

Provided that in case the share money is not deposited within the

prescribed time, the shares shall be deemed to be cancelled and the name of

that subscriber shall be removed from the register and the registrar shall

give such direction to the company in each case as deemed appropriate for

compliance with the provisions of the company law.

(3) The receipt of subscription money from the subscribers shall be

reported by the company to the registrar on a specified form within forty-five

days from the date of incorporation of the company, accompanied by a certificate

by a practicing chartered accountant or a cost and management accountant

verifying receipt of the money so subscribed.


(4) Any violation of this section shall be an offence liable to a penalty

of level 1 on the standard scale.

18. Effect of registration.—The registration of the company has the

following effects, as from the date of incorporation—

(a) the subscribers to the memorandum, together with such other persons as may from time to time become members of the

company, are a body corporate by the name stated in the certificate

of incorporation;

(b) the body corporate is capable of exercising all the functions of an incorporated company, having perpetual succession and a common

seal;

(c) the status and registered office of the company are as stated in, or in connection with, the application for registration;

(d) in case of a company having share capital, the subscribers to the memorandum become holders of the initial shares; and

(e) the persons named in the articles of association as proposed directors, are deemed to have been appointed to that office.

COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY

19. Commencement of business by a public company.—(1) A public

company shall not start its operations or exercise any borrowing powers unless—

(a) shares held subject to payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the

minimum subscription and the money has been received by the

company;

(b) every director of the company has paid to the company full amount on each of the shares taken or contracted to be taken by him and for

which he is liable to pay in cash;

(c) no money is or may become liable to be repaid to applicants for any shares which have been offered for public subscription;

(d) there has been filed with the registrar a duly verified declaration by the chief executive or one of the directors and the secretary in the

specified form that the aforesaid conditions have been complied

with; and


(e) in the case of a company which has not issued a prospectus inviting the public to subscribe for its shares, there has been filed with the

registrar a statement in lieu of prospectus as per the Second

Schedule annexed to this Act.

Explanation.—―minimum subscription‖ means the amount, if any,

fixed by the memorandum or articles of association as minimum subscription

upon which the directors may proceed to allotment or if no amount is so fixed

and specified, the whole amount of the share capital other than that issued or

agreed to be issued as paid up otherwise than in cash.

(2) The registrar shall, on filing of a duly verified declaration in

accordance with the provisions of sub-section (l) and after making such enquiries

as he may deem fit to satisfy himself that all the requirements of this Act have

been complied with in respect of the commencement of business and matters

precedent and incidental thereto, accept and register all the relevant documents.

(3) The acceptance and registration of documents under sub-section (2)

shall be a conclusive evidence that the company is entitled to start its operations

and exercise any borrowing powers.

(4) Nothing in this section shall apply—

(a) to a company converted from private to a public;

(b) to a company limited by guarantee and not having a share capital.

20. Consequences of non-compliance of section 19.—(1) If any

company starts its business operations or exercises borrowing powers in

contravention of section 19, every officer or other person who is responsible for

contravention shall without prejudice to other liabilities be liable to a penalty not

exceeding level 2 on the standard scale.

(2) Any contract made by a company before the date at which it is

entitled to commence business shall be provisional only and shall not be binding

on the company until that date and on that date it shall become binding.

REGISTERED OFFICE AND PUBLICATION OF NAME

21. Registered office of company.—(1) A company shall have a

registered office to which all communications and notices shall be addressed and

within a period of thirty days of its incorporation, notify to the registrar in the

specified manner.


(2) Notice of any change in situation of the registered office shall be

given to the registrar in a specified form within a period of fifteen days after the

date of change:

Provided that the change of registered office of a company from—

(a) one city in a Province to another; or

(b) a city to another in any part of Pakistan not forming part of a Province;

shall require approval of general meeting through special resolution.

(3) If a company fails to comply with the requirements of sub-section

(1) or (2), the company and its every officer who is responsible for such non-

compliance shall be liable to a penalty not exceeding of level 1 on the standard

scale.

22. Publication of name by a company.—Every company shall—

(a) display in a conspicuous position, in letters easily legible in English or Urdu characters its name and incorporation number outside the

registered office and every office or the place in which its business

is carried on;

(b) display a certified copy of certificate of incorporation at every place of business of the company;

(c) get its name, address of its registered office, telephone number, fax number, e-mail and website addresses, if any, printed on letter-head

and all its documents, notices and other official publications; and

(d) have its name mentioned in legible English or Urdu characters, in all bills of exchange, promissory notes, endorsements, cheques and

orders for money or goods purporting to be signed by or on behalf

of the company and in all bills of parcels, invoices, receipts and

letters of credit of the company.

23. Company to have common seal.—(1) Every company shall have

a common seal.

(2) A company‘s common seal must be a seal having the company‘s

name engraved on it in legible form.


(3) If any of the provision of this section is contravened or an officer

of a company or a person on behalf of a company uses or authorises the use of

another seal that purports to be the company‘s common seal, shall be liable to a

penalty not exceeding of level 1 on the standard scale.

24. Penalties for non-publication of name.—(l) If a company does

not display its name in the manner provided for by this Act, it shall be liable to a

penalty not exceeding level 1 on the standard scale and every officer of the

company who authorises or permits the default shall be liable to the like penalty.

(2) If any officer of a limited company issues or authorises the issue of

any bill-head, letter paper, document, notice or other official publication of the

company, or signs or authorises to be signed on behalf of the company any bill of

exchange, promissory note, endorsement, cheque or order for money or goods,

or issues or authorises to be issued any bill of parcels, invoice, receipt or letter of

credit of the company, wherein its name is not mentioned in the manner

aforesaid, he shall be liable to a penalty not exceeding of level 1 on the standard

scale and shall further be personally liable to the holder of any such bill of

exchange, promissory note or order for money or goods, for the amount thereof

unless the same is duly paid by the company.

25. Publication of authorised as well as paid-up capital.—(1) Where

any notice, advertisement or other official publication of a company contains a

statement of amount of authorised capital of the company, such notice,

advertisement or other official publication shall also contain a statement in an

equally prominent position and in equally conspicuous characters of amount of

the paid up capital.

(2) Any company which makes default in complying with the

requirements of sub-section (1) and every officer of the company who is party to

the default shall be liable to a penalty not exceeding of level 1 on the standard

scale.

26. Business and objects of a company.—(1) A company may carry

on or undertake any lawful business or activity and do any act or enter into any

transaction being incidental and ancillary thereto which is necessary in attaining

its business activities:

Provided that—

(i) the principal line of business of the company shall be mentioned in

the memorandum of association of the company which shall always

commensurate with name of the company; and


(ii) any change in the principal line of business shall be reported to the

registrar within thirty days from the date of change, on the form as

may be specified and registrar may give direction of change of

name if it is in violation of this section.

Explanation.—―principal line of business‖ means the business in

which substantial assets are held or likely to be held or substantial

revenue is earned or likely to be earned by a company, whichever is

higher.

(2) A company shall not engage in a business which is—

(a) prohibited by any law for the time being in force in Pakistan; or

(b) restricted by any law, rules or regulations, unless necessary licence, registration, permission or approval has been obtained or

compliance with any other condition has been made:

Provided nothing in sub-section (1) shall be applicable to the

extent of such companies.

MEMORANDUM AND ARTICLES OF ASSOCIATION

27. Memorandum of company limited by shares.—In the case of a

company limited by shares-

(A) the memorandum shall state—

(i) the name of the company with the word ―Limited‖ as last word of the name in the case of a public limited company, the

parenthesis and words ―(Private) Limited‖ as last words of the

name in the case of a private limited company, and the

parenthesis and words ―(SMC-Private) Limited‖ as last words

of the name in the case of a single member company;

(ii) the Province or the part of Pakistan not forming part of a Province, as the case may be, in which the registered office of

the company is to be situate;

(iii) principal line of business:

Provided that—

(a) the existing companies shall continue with their existing memorandum of association and the object stated at


serial number 1 of the object clause shall be treated as

the principal line of business;

(b) if the object stated at serial number 1 of the object clause is not the principal line of business of the company, it

shall be required to intimate to the registrar their

principal line of business within such time from

commencement of this Act and in the form as may be

specified. A revised copy of the memorandum of

association indicating therein its principal business at

serial number 1 of the object clause shall also be

furnished to the registrar; and

(c) the existing companies or the companies to be formed to carry on or engage in any business which is subject to a

licence or registration, permission or approval shall

mention the businesses as required under the respective

law and the rules and regulations made thereunder;

(iv) an undertaking as may be specified;

(v) that the liability of the members is limited; and

(vi) the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed

amount;

(B) no subscriber of the memorandum shall take less than one share;

and

(C) each subscriber of the memorandum shall write opposite to his

name the number of shares he agrees to take.

28. Memorandum of company limited by guarantee.—(1) In the

case of a company limited by guarantee the memorandum shall state—

(a) the name of the company with the parenthesis and words ―(Guarantee) Limited‖ as last words of its name;

(b) the Province or the part of Pakistan not forming part of a Province, as the case may be, in which the registered office of the company is

to be situate;

(c) principal line of business:


Provided that—

(i) the existing companies shall continue with their existing memorandum of association and the object stated at serial number 1

of the object clause shall be treated as the principal line of business;

(ii) if the object stated at serial number 1 of the object clause is not the principal line of business of the company, it shall be required to

intimate to the registrar their principal line of business within such

time from the commencement of this Act and in the form as may be

specified. A revised copy of the memorandum of association

indicating therein its principal business at serial number 1 of the

object clause shall also be furnished to the registrar; and

(iii) the existing companies or the companies to be formed to carry on or engage in any business which is subject to a licence or registration,

permission or approval shall mention the businesses as required

under the respective law;

(d) an undertaking as may be specified;

(e) that the liability of the members is limited; and

(f) such amount as may be required, not exceeding a specified amount that each member undertakes to contribute to the assets of the

company in the event of its being wound up while he is a member

or within one year afterwards for payment of the debts and

liabilities of the company contracted before he ceases to be a

member and of the costs, charges and expenses of winding up and

for adjustment of rights of the contributories among themselves.

(2) If the company has a share capital, the memorandum shall also state

the amount of share capital with which the company proposes to be registered

and the division thereof into shares of a fixed amount and the number of shares

taken by each subscriber.

29. Memorandum of unlimited company.—In the case of an

unlimited company the memorandum shall state—

(a) the name of the company with the word ―Unlimited‖ as last words of its name;

(b) the Province or the part of Pakistan not forming part of a Province, as the case may be, in which registered office of the company is to

be situate;


(c) principal line of business:

Provided that—

(i) the existing companies shall continue with their existing memorandum of association and the object stated at serial number 1

of the object clause shall be treated as the principal line of business;

(ii) if the object stated at serial number 1 of the object clause is not the principal line of business of the company, it shall be required to

intimate to the registrar their principal line of business within such

time from the commencement of this Act and in the form as may be

specified. A revised copy of the memorandum of association

indicating therein its principal business at serial number 1 of the

object clause shall also be furnished to the registrar; and

(iii) the existing companies or the companies to be formed to carry on or engage in any business which is subject to a licence or registration,

permission or approval shall mention the businesses as required

under the respective law; and

(d) an undertaking as may be specified;

(e) that the liability of the members is unlimited.

(2) If the company has a share capital, the memorandum shall also state

the amount of share capital with which the company proposes to be registered

and the number of shares taken by each subscriber.

30. Borrowing powers to be part of memorandum.—Notwithstanding

anything contained in this Act or in any other law for the time being in force or the

memorandum and articles, the memorandum and articles of a company shall be

deemed to include and always to have included the power to enter into any

arrangement for obtaining loans, advances, finances or credit, as defined in the

Banking Companies Ordinance, 1962 (LVII of 1962) and to issue other securities

not based on interest for raising resources from a scheduled bank, a financial

institution or general public.

31. Memorandum to be printed, signed and dated.—The

memorandum shall be—

(a) printed in the manner generally acceptable;

(b) divided into paragraphs numbered consecutively;


(c) signed by each subscriber, who shall add his present name in full, his occupation and father‘s name or, in the case of a married

woman or widow, her husband‘s or deceased husband‘s name in

full, his nationality and his usual residential address and such other

particulars as may be specified, in the presence of a witness who

shall attest the signature and shall likewise add his particulars; and

(d) dated.

32. Alteration of memorandum.—(1) Subject to the provisions of this

Act, a company may by special resolution alter the provisions of its

memorandum so as to—

(a) change the place of its registered office from.—

(i) one Province to another Province or Islamabad Capital

Territory and vice versa; or

(ii) one Province or Islamabad Capital Territory to a part of

Pakistan not forming part of a Province and vice versa; or

(b) change its principal line of business; or

(c) adopt any business activity or any change therein which is subject to licence, registration, permission or approval under any law.

(2) The alteration shall not take effect until and except in so far as it is

confirmed by the Commission on petition:

Provided that an alteration so as to change its principal line of business

shall not require confirmation by the Commission.

(3) A copy of the order confirming the alteration duly certified by an

authorised officer of the Commission shall be forwarded to the company and to

the registrar within seven days from the date of the order.

(4) A copy of the memorandum of association as altered pursuant to

the order under this section shall within thirty days from the date of the order be

filed by the company with the registrar, who shall register the same and issue a

certificate which shall be conclusive evidence that all the requirements of this

Act with respect to the alteration and the confirmation thereof have been

complied with and thenceforth the memorandum so filed shall be the

memorandum of the company:


Provided that the Commission may by order, at any time on an

application by the company, on sufficient cause shown extend the time for the

filing of memorandum with the registrar under this section for such period as it

thinks proper.

(5) Where the alteration involves a transfer of registered office from

the jurisdiction of one company registration office to another, physical record of

the company shall be transferred to the registrar concerned of the company

registration office in whose jurisdiction the registered office of the company has

been shifted.

(6) Where the alteration involves change in principal line of business,

the company shall file the amended memorandum of association with the

registrar within thirty days, which shall be recorded for the purposes of this Act.

33. Powers of Commission when confirming alteration.—The

Commission may make an order confirming the alteration on such terms and

conditions as it thinks fit and make such order as to costs as it thinks proper.

34. Exercise of discretion by Commission.—The Commission shall

in exercising its discretion under sections 32 and 33 have regard to the rights and

interests of the members of the company or of any class of them, as well as to the

rights and interests of the creditors and may, if it thinks fit, give such directions

and make such orders as it may think expedient for facilitating or carrying into

effect any such arrangement.

35. Effect of alteration in memorandum or articles.—Notwithstanding

anything contained in the memorandum or articles of a company, no member of the

company shall be bound by an alteration made in the memorandum or articles after

the date on which he became a member if and so far as the alteration requires him

to take or subscribe for more shares than the number held by him at the date on

which the alteration is made or in any way increases his liability as at that date to

contribute to the share capital of or otherwise to pay money to the company:

Provided that this section shall not apply in any case where the member

agrees in writing either before or after the alteration is made to be bound thereby.

ARTICLES OF ASSOCIATION

36. Registration of articles.—(1) There may, in the case of company

limited by shares and there shall, in the case of a company limited by guarantee

or an unlimited company, be registered with the memorandum, articles of

association signed by the subscribers to the memorandum and setting out

regulations for the company.


(2) Articles of association of a company limited by shares may adopt

all or any of the regulations contained in Table A in the First Schedule to this

Act.

(3) In the case of an unlimited company or a company limited by

guarantee, the articles, if the company has a share capital, shall state the amount

of share capital with which the company proposes to be registered.

(4) In the case of an unlimited company or a company limited by

guarantee, if the company has no share capital, the articles shall state the number

of members with which the company proposes to be registered.

(5) In the case of a company limited by shares and registered after the

commencement of this Act, if articles are not registered, or, if articles are

registered, in so far as the articles do not exclude or modify the regulations in

Table A in the First Schedule to this Act, those regulations shall, so far as

applicable, be the regulations of the company in the same manner and to the

same extent as if they were contained in duly registered articles.

(6) The articles of every company shall be explicit and without

ambiguity and, without prejudice to the generality of the foregoing, shall list and

enumerate the voting and other rights attached to the different classes of shares

and other securities, if any, issued or to be issued by it.

(7) If a company contravenes the provisions of its articles of

association, the company and every officer of the company shall be liable to a

penalty not exceeding of level 1 on the standard scale.

37. Articles to be printed, signed and dated.—The articles shall be—

(a) printed in the manner generally acceptable;

(b) divided into paragraphs numbered consecutively;

(c) signed by each subscriber, who shall add his present name in full, his occupation and father‘s name or, in the case of a married

woman or widow, her husband‘s or deceased husband‘s name in

full, his nationality and his usual residential address and such other

particulars as may be specified, in the presence of a witness who

shall attest the signature and shall likewise add his particulars; and

(d) dated.

38. Alteration of articles.—(1) Subject to the provisions of this Act

and to the conditions contained in its memorandum, a company may, by special


resolution, alter its articles and any alteration so made shall be as valid as if

originally contained in the articles and be subject in like manner to alteration by

special resolution:

Provided that, where such alteration affects the substantive rights or

liabilities of members or of a class of members, it shall be carried out only if a

majority of at least three-fourths of the members or of the class of members

affected by such alteration, as the case may be, exercise the option through vote

personally or through proxy vote for such alteration.

(2) A copy of the articles of association as altered shall, within thirty

days from the date of passing of the resolution, be filed by the company with the

registrar and he shall register the same and thenceforth the articles so filed shall

be the articles of the company.

39. Copies of memorandum and articles to be given to members.—

(1) Each company shall send to every member, at his request and within fourteen

days thereof, on payment of such sum, as the company may fix, a copy of the

memorandum and the articles, if any.

(2) If a company makes default in complying with the requirements of

sub-section (1), it shall be liable to a penalty not exceeding of level 1 on the

standard scale.

40. Alteration of memorandum or articles to be noted in every

copy.—(1) Where an alteration is made in the memorandum or articles of a

company, every copy of the memorandum or articles issued after the date of the

alteration shall conform to the memorandum or articles as so altered.

(2) If, where any such alteration has been made, the company at any

time after the date of the alteration issues any copies of the memorandum or

articles which do not conform to the memorandum or articles as so altered it shall

be liable to a penalty not exceeding of level 1 on the standard scale for each copy

so issued and every officer of the company who is in default shall be liable to the

like penalty.

41. Form of memorandum and articles.—The form of—

(a) memorandum of association of a company limited by shares;

(b) memorandum and articles of association of a company limited by guarantee and not having a share capital;

(c) memorandum and articles of association of a company limited by guarantee and having a share capital; and


(d) memorandum and articles of association of an unlimited company having a share capital,

shall be respectively in accordance with the forms set out in Tables B, C, D and E

in the First Schedule or as near thereto as circumstances admit.

42. Licencing of associations with charitable and not for profit

objects.—(1) Where it is proved to the satisfaction of the Commission that an

association is to be formed as a limited company—

(a) for promoting commerce, art, science, religion, health, education, research, sports, protection of environment, social welfare, charity

or any other useful object;

(b) such company—

(i) intends to apply the company‘s profits and other income in promoting its objects; and

(ii) prohibits the payment of dividends to the company‘s members; and

(c) such company‘s objects and activities are not and shall not, at any time, be against the laws, public order, security, sovereignty and

national interests of Pakistan,

the Commission may, by licence for a period to be specified, permit the

association to be registered as a public limited company, without addition of the

word ―Limited‖ or the expression‖(Guarantee) Limited‖, to its name.

(2) A licence under sub-section (1) may be granted on such conditions

and subject to such regulations as the Commission thinks fit and those conditions

shall be inserted in and deemed part of the memorandum and articles, or in one of

those documents.

(3) Memorandum and articles of association of a company, licenced

under this section, shall be in accordance with the form set out in Table F in the

First Schedule or as near thereto as circumstances admit and approved by the

Commission.

(4) The association on registration under this section shall enjoy all the

privileges and be subject to all the obligations of a limited company.


(5) The Commission may at any time by order in writing, revoke a

licence granted under sub-section (1), with such directions as it may deem fit, on

being satisfied that—

(a) the company or its management has failed to comply with any of the terms or conditions subject to which a licence is granted; or

(b) any of the requirements specified in sub-section (1) or any regulations made under this section are not met or complied with;

or

(c) affairs of the company are conducted in a manner prejudicial to public interest; or

(d) the company has made a default in filing with the registrar its financial statements or annual returns for immediately preceding

two consecutive financial years; or

(e) the company has acted against the interest, sovereignty and integrity of Pakistan, the security of the State and friendly relations

with foreign States; or

(f) the number of members is reduced, below three; or

(g) the company is—

(i) conceived or brought forth for, or is or has been carrying on, unlawful or fraudulent activities; or

(ii) run and managed by persons who fail to maintain proper and true accounts or they commit fraud, misfeasance or

malfeasance in relation to the company; or

(iii) run and managed by persons who are involved in terrorist financing or money laundering; or

(iv) managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions

of this Act or failed to carry out the directions or decisions of

the Commission or the registrar given in exercise of the

powers conferred by this Act; or

(v) not carrying on its business or is not in operation for one year; or

(h) it is just and equitable that the licence should be revoked:


Provided that before a licence is so revoked, the Commission shall

give to the company a notice, in writing of its intention to do so, and

shall afford the company an opportunity to be heard.

(6) Notwithstanding anything contained in this Act or any other law, no

association shall be registered as a company with the objects as mentioned in

clause (a) and the conditions provided in clause (b) of sub-section (1) without a

licence granted in pursuance of this section.

43. Effect of revocation of licence.— (1) On revocation of licence of a

company under section 42, by the Commission—

(a) the company shall stop all its activities except the recovery of money owed to it, if any;

(b) the company shall not solicit or receive donations from any source; and

(c) all the assets of the company after satisfaction of all debts and liabilities shall, in the manner as may be specified, be transferred to

another company licenced under section 42, preferably

dawood family takaful limited - no. f. 22(40)/2016 -legis ...islamabad, wednesday, may 31, 2017 part...

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